Steps in Determining the Legitime of Compulsory Heirs
PROHIBITED ACTS OF AN AGENT
Q: What are the instances when the agent may retain in pledge the object of the agency?
A:
1. If principal fails to reimburse the agent the necessary sums, including interest, which the latter advanced for the execution of the agency (Art. 1912, NCC); or
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U N I V E R S I T Y O F S A N T O T O M A S F a c u l t a d d e D e r e c h o C i v i l
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
VICE CHAIRS FOR ACADEMICS: KAREN JOY G. SABUGO & JOHN HENRY C. MENDOZA VICE CHAIR FOR ADMINISTRATION AND FINANCE: JEANELLE C. LEE
VICE CHAIRS FOR LAY‐OUT AND DESIGN: EARL LOUIE M. MASACAYAN & THEENA C. MARTINEZ
2. If principal fails to indemnify the agent for all damages which the execution of the agency may have caused the latter, without fault or negligence on his part.
(Art. 1913, NCC)
Q: What is the rule where two persons deal separately with the agent and the principal?
A: If the two contracts are incompatible with each other, the one of prior date shall be preferred.
This is subject however to the rule on double sale under Art. 1544, NCC.
Note: Rules of preference in double sale
1. Personal property – possessor in good faith
2. Real property
a. Registrant in good faith b. Possessor in good faith
c. Person with the oldest title in good faith (Art. 1544, NCC)
If agent acted in good faith, the principal shall be liable for damages to the third person whose contract must be rejected. If agent is in bad faith, he alone shall be liable. (Art. 1917, NCC)
PROHIBITED ACTS OF AN AGENT
Q: What are the prohibited acts of an agent?
A:
1. Personal acts 2. Criminal or illegal acts
Note: e.g.:
1. Right to vote 2. Making of a will 3. Under oath statements
4. Attending board meetings of corporations.
(De Leon, p. 358, 2005 ed)
Q: Can a person acting as an agent escape criminal liability by virtue of the contract of agency?
A: No. The law on agency has no application in criminal cases. When a person participates in the
commission of a crime, he cannot escape punishment on the ground that he simply acted as an agent of another party. (Ong v. CA, G.R. No.
119858, Apr. 29, 2003)
X. IRREVOCABLE AGENCY
Q: When is agency irrevocable?
A:
1. If a bilateral contract depends upon it 2. if it is the means of fulfilling an
obligation already contracted
3. if partner is appointed manager and his removal from the management is unjustifiable. (Art 1927)
4. if it has been constituted in the common interest of the principal and the agent (Art. 1930)
5. Stipulation pour atrui
Q: How may the agent withdraw from the agency?
A: The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. (1736a)
NOTE: The agent, even if he should withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation.
XI. MODES OF EXTINGUISHMENT
Q: What is “presumption of continuance of agency”?
A: It means that when once shown to have existed, an agency relation will be presumed to have continued, in the absence of anything which shows its termination.
Q: What are the essential elements for continuance of agency?
A: Both principal and agent must be:
1. Present 2. Capacitated
3. Solvent (De Leon, Comments and Cases on Partnership, Agency, and Trust, p.
610, 2005 ed)
Q: Can the heirs continue the agency?
A:
GR: No.
Ratio: The agency calls for personal services on the part of the agent since it is founded on a fiduciary relationship; rights and obligations intransmissible.
XPNs:
1. Agency by operation of law, or a presumed or tacit agency
2. Agency is coupled with an interest in the subject matter of the agency (e.g.
power of sale in a mortgage)
Q: What are the modes of extinguishing an agency?
A: EDWARD
1. Expiration of the period
2. Death, civil interdiction, insanity or insolvency of principal or of the agent 3. Withdrawal by the agent
4. Accomplishment of the object or the purpose of the agency
5. Revocation
6. Dissolution of the firm or corporation which entrusted or accepted the agency.
Note: The list is not exclusive; May also be extinguished by the modes of extinguishment of obligations in general whenever they are applicable, like loss of the thing and novation.
REVOCATION
Q: Is a contract of agency revocable?
A:
GR: Yes. Agency is revocable at will by the principal.
XPNs: It cannot be revoked if:
1. a bilateral contract depends upon it 2. it is the means of fulfilling an obligation
already contracted
3. a partner is appointed manager of a partnership and his termination is unjustifiable
4. it is created not only for the interest of the principal but also for the interest of third persons
XPN to the XPN: When the agent acts to defraud the principal.
Q: What are the kinds of revocation?
A: Revocation may either be express or implied.
(De Leon, Comments and Cases on Partnership, Agency, and Trust, p. 625, 2005 ed)
Q: How is agency impliedly revoked?
A: Principal:
1. appoints a new agent for the same business or transaction (Art. 1923, NCC);
2. directly manages the business entrusted to the agent (Art. 1924, NCC);
or
3. after granting general power of attorney, grants a special one to another agent which results in the revocation of the former as regards the special matter involved in the latter.
(Art. 1926, NCC)
Q: How is agency revoked when the agent has been appointed by two or more principals?
A: Any one of the principals is granted the right to revoke the power of attorney without the consent of the others.
Q: Is notice of revocation necessary?
A:
1. As to the agent – Express notice is not necessary; sufficient notice if the party to be notified actually knows, or has reason to know, a fact indicating that
his authority has been
terminated/suspended; revocation without notice to the agent will not render invalid an act done in pursuance of the authority
2. As to 3rd persons – Express notice is necessary
a. As to former customers – Actual notice must be given to them because they always assume the continuance of the agency relationship
b. As to other persons – Notice by publication is enough
Note: There is implied revocation of the previous agency when the principal appoints a new agent for the same business or transaction, provided there is incompatibility. But the revocation does not become effective as between the principal and the agent until it is in some way communicated to the latter.
Q: What is the effect of the direct management by the principal?
A:
GR: The agency is revoked for there would no longer be any basis for the representation previously conferred. But the principal must act in good faith and not merely to avoid his obligation to the agent.
XPN: The only desire of the principal is for him and the agent to manage the business together.
Q: Richard sold a large parcel of land in Cebu to Leo for P100 million payable in annual installments over a period of ten years, but title will remain with Richard until the purchase price is fully paid. To enable Leo to pay the price, Richard gave him a power‐of‐attorney authorizing him to subdivide the land, sell the individual lots, and deliver the proceeds to Richard, to be applied to the purchase price. Five years later, Richard revoked the power of attorney and took over the sale of the subdivision lots himself. Is the revocation valid or not? Why?
A: The revocation is not valid. The power of attorney given to the buyer is irrevocable because it is coupled with an interest – the agency is the means of fulfilling the obligation of the buyer to pay the price of the land (Art. 1927, NCC). In other words, a bilateral contract (contract to buy and sell the land) is dependent on the agency. (2001 Bar Question)
Q: Eduardo executed a SPA authorizing Zenaida to participate in the pre‐qualification and bidding of a NIA project and to represent him in all transactions related thereto. It was granted to them. Zenaida leased Manuel’s heavy equipment to be used for the NIA project.
Manuel interposed no objection to Zenaida’s actuations. Eduardo later revoked the SPA alleging that Zenaida acted beyond her authority in contracting with Manuel under the SPA.
Decide.
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A: No. Eduardo and Zenaida entered into a partnership with regard to the NIA project. Also, Eduardo was present when Zenaida contracted with Manuel. Under Art. 1818, NCC, every partner is an agent of the partnership for the purpose of its business and each one may separately execute all acts of administration, unless, under Art. 1801, NCC, a specification of their respective duties has been agreed upon, or else it is stipulated that any one of them shall not act without the consent of all the others. (Mendoza v. Paule, G.R. No.
175885, Feb. 13, 2009)
DEATH
Q: What is the effect of death of a party to the contract of agency?
A:
GR: The agency is terminated by the death of the principal even if the agency is for a definite period.
XPNs:
1. If it has been constituted in common interest of the principal and the agent or in the interest of the third person who accepted the stipulation in his favor; or
2. Anything done by the agent without the knowledge of the death of the principal or on any other cause which extinguishes the agency is valid and shall be effective on third persons who may have contracted with him in good faith.
Q: Is the sale of the land by the agent after the death of the principal valid?
A: Article 1931, NCC provides that an act done by the agent after the death of the principal is valid and effective if these two requisites concur:
1. that the agent acted without the knowledge of the death of the principal;
and
2. that the third person who contracted with the agent himself acted in good faith.
Good faith here means that the third person was not aware of the death of the principal at the time that he contracted with said agent. (Rallos v.
Felix Go Chan, G.R. No. L‐24332, Jan. 31, 1978)
U N I V E R S I T Y O F S A N T O T O M A S F a c u l t a d d e D e r e c h o C i v i l
ACADEMICS CHAIR: LESTER JAY ALAN E. FLORES II
VICE CHAIRS FOR ACADEMICS: KAREN JOY G. SABUGO & JOHN HENRY C. MENDOZA VICE CHAIR FOR ADMINISTRATION AND FINANCE: JEANELLE C. LEE
VICE CHAIRS FOR LAY‐OUT AND DESIGN: EARL LOUIE M. MASACAYAN & THEENA C. MARTINEZ
CHANGE OF CIRCUMSTANCES SURROUNDING